Beauty product retailer Nykaa gearing up for a public issue later this fiscal at a valuation of $ 4.5 billion, a sharp rise from its earlier valuation of more than $ 3 billion. The startup gained from a marked shift towards online sales during the lockdown due to the Coronavirus pandemic that served as a bane for most but a boon for e-commerce.
Founded in 2012 by former investment banker Falguni Nayar, Nykaa will keep unchanged the size of the public offering at between $ 500 million and $ 700 million, said sources in the know. They added that the rise in the beauty retailing startup’s overall valuation is guided by a surge in revenue and profit, principally due to COVID-related disruptions, which has driven more customers to buy online.
Profits from 2019 onwards strengthens path for IPO
Nykaa currently has 74 stores across the country and has high-end luxury brands like Tom Ford, Jo Malone London, Dior, and Givenchy. The startup claims to fulfill over 1.5 million orders per month which offer over 130k products from 1.5k brands.
According to reports, the company in the Financial Year 2020, made revenue of Rs 1860 crore with an EBITDA (earnings before interest tax depreciation and amortization) of Rs 94 crore. The company started earning profits in FY 2019 after suffering losses in FY 2018.
The company started its offline operations in 2015, and in 2018 it entered the fashion industry under the name Nykaa Fashion which is a place for 450 local and international brands ranging from high streets, designer labels, and accessories.
“The roadshows are on for the IPO (initial public offer), and FSN Ecommerce Ventures Pvt. Ltd, the holding company of Nykaa, will file its draft red herring prospectus by this June-end or early July, and the IPO should take off in the March quarter of this fiscal,” said sources close to the development.
“The public offer will be coupled with an offer for sale to provide an exit to existing investors. The price band is yet to be decided, but a 10-20 percent stake of the firm could be offered to the public for an adequate free-float,” the source added.
The beauty retailer has designated Morgan Stanley and Kotak Mahindra Capital Co. as managers for its public offering. Although other big unicorn startups, or the ones with a valuation of over $ 1 billion, are also planning to go public, Nykaa is the only startup that is profitable and will fit the criteria to list on the main board of Indian stock exchanges, according to the report.